A blog of Bridge Environment, updated weekly on Thursdays, travel permitting.
Bridge Environment seeks to catalyze a cultural shift in how our society addresses environmental issues. We provide relevant and unbiased advice to any interested party, and also work to educate scientists, policy makers, and the public on how to have a more informative dialog over environmental issues.

Thursday, May 30, 2013

Two
weeks ago, I wrote about the
economics of fiscal stimulus and how the current debate surrounding it looks a
lot like an environmental policy debate. Though we face a fundamental trade-off
between the risk of future debt weighing the economy and that of current
austerity stunting growth, these trade-offs have not been directly addressed. I
suggested that we might have a more productive debate about fiscal stimulus
policy by highlighting this trade-off with an emphasis on uncertainties and how
we would like to address them. The current debate, though, looks a lot like the
dysfunctional negotiations we have over most environmental policy issues.

What is surprising about the
dysfunction around fiscal stimulus is that economists often do a better job.
One of the pleasures I had in going back to school to study economics after a
career as an environmental scientist and policy adviser was the chance to experience
an entirely different academic culture. Ecologists are often driven by field
observational or laboratory skills, with statistics and mathematical modeling relegated
to simple approaches or specialists within the field. My own math skills were
what made me stand out as an ecologist and environmental scientist. At the same
time, despite some general platitudes towards conservation issues, most
academic ecologists keep arms-distance away from environmental policy
processes. I raised concerns about the inability of ecologists to provide
effective advice under these circumstances as a graduate student, and in 2003
in a letter published in the journal Frontiers
in Ecology and the Environment and believe my observations and suggestions
are still relevant today.

In contrast, though many academic
economists focus on theoretical work and stay away from policy matters, there
are well-respected academic economists at the very top echelons of
policy-making (e.g., the Federal Reserve Board plus typically at least two Cabinet-level
positions in the White House) and public commentary (e.g., Paul Krugman of the
New York Times). Also, whereas my math skills are well beyond those of most
ecologists, they only barely keep me afloat among my economic colleagues.

No doubt as a result of these two
characteristics, economic policy debates generally do a better job of addressing
fundamental trade-offs and acknowledging uncertainty than environmental debates.
The public is often only vaguely aware of the details. Take the Taylor Rule as an example.

it
– πt – r*t = aπ(πt – π*t)
+ ay(yt – y*t)

This rule calculates an interest
rate goal (nominal interest, it, minus inflation, πt, and
an assumed/targeted real interest rate, r*t) for the
Federal Reserve based on the degree to which inflation (πt) and
economic growth (yt) are matching targets (π*t
and y*t, respectively). The adjustment-rate parameters, aπ
and ay, establish the responsiveness of the policy to divergences of
inflation and economic growth rates from goals.

Don’t worry if the equation looks
Greek. The concept is this: interest rates are adjusted down if inflation is low,
economic growth is weak, or some combination of the two; and up if the opposite
conditions hold. This rule was proposed as a way of setting monetary policy
objectively and dispassionately, and has benefits both in terms of stabilizing
policy choices and making them more predictable for people and industries
affected by these choices. Interestingly, the equation specifies a general
framework rather than a specific policy. In particular, policymakers must
choose target levels for inflation and growth, and adjustment rates for how to
respond to being off-target. Sound like rocket
science as applied to fisheries? It should. The principles are identical.
Monetary policy was not an area I studied in depth, but I was always curious
whether analysts had explored the implications of different policy choices
within a Taylor Rule. From a cursory scan of the literature, it seems that most
work has focused on whether interest rates should respond more to inflation or
growth deviations, rather than a comprehensive analysis of the costs and
benefits of more or less responsive policies in general.

Regardless, the existence of this
rule and its widespread use and sometimes direct application when the Fed
considers its monetary policy choices serve as evidence that economists really
do a better job of informing public policy debates than ecologists and
environmental scientists.

To improve the situation for the
environment, the necessary changes are pretty obvious and yet far from easy to
enact. We need whole groups of trained environmental scientists in
decision-making positions. We also need an environmental science field that
elevates its quantitative skills so that more ecologists are proficient with
highly technical statistical and mathematical models. These changes will not be
easy to enact because, unlike the field of economics where academics are
recognized and rewarded for their efforts to understand and address the nuances
of real-world policies, ecologists still mostly work in ivory towers. Until
the profession changes to better-reward ecologists for working on and
publishing results from detailed policy analyses, there they will stay.

Thursday, May 23, 2013

I
am currently in Florida
attending the North American Association of Fisheries Economists’ Biennial
Forum. Yes, there are enough fisheries economists in North America that we can
talk, three at a time and with 15-20 minutes each, for three days straight!

Ray
Hilborn of the University of Washington gave our plenary address yesterday
morning. He made two interrelated points. First, he argued that our fisheries
are influenced by environmental fluctuations in unpredictable ways, and thus
need what he called robust policies. Second, he argued that we currently “lose”
a lot of potential food, jobs, and income by underfishing many fish stocks.

I
challenged him on these points, pointing out that his measure of “loss” was
diversion from a policy (maximum sustainable yield) that was rarely in fact
sustainable. I argued that robust policies come with a cost and perhaps the
foregone yield was serving that purpose. Regular readers of this blog will
recognize these points from previous entries. He acknowledged the possibility that
we were gaining robustness, and responded by advocating for a systematic review
of what we are actually getting from our fisheries, so that foregone food,
jobs, and income would be acknowledged and designed to meet other objectives.
On this point, we both agreed.

Following
his talk, there was a panel discussion on economics and catch-limit setting
rules under US fisheries law. The panel discussed the current systems for
setting quotas and generally complained that they all look pretty similar when
in fact they could and should be meeting the specific economic, social, and
ecological needs of each fishery.

Their
argument warmed my heart at the same time that it left me keenly frustrated. I
started working on national-level fisheries in 1998, and my mantra was this:
fisheries are fundamentally uncertain, we need robust policies to address the
associated risks, robustness comes at a cost which might be some foregone food,
jobs, and income, and we should use the existing legal mandate to customize the
catch rules for each fishery to account for specific economic, social, and
ecological needs. I made this pitch to most of the fishery management councils
across the country, to the government fisheries agency, and to numerous fishing
and conservation groups. Despite much effort on my part, I didn’t have much
success making national level change, nor even in incorporating this approach
into my own work as a fisheries stock assessment biologist. There was simply
too much inertia and pushback. Therefore, it was heartening to hear a group of
well-respected scientists discussing these same issue 15 years later, albeit
frustrating that it took so long.

If
we are going to have better success this time around, we need to confront a
situation that hasn’t changed much in 15 years. First, let’s be clear about
where the problem lies. Is it the law or its application? The law is quite
good, and has been since 1996. It sets optimum yield as a primary goal for
catch setting policies. Optimum yield is defined to incorporate the need for
food production, recreational opportunities, and ecosystem protection.
Specifically it is supposed to based on maximum sustainable yield, as reduced
by relevant economic, social, and ecological factors.

One
could take argument with restricting optimum yield to lie below maximum
sustainable yield (and Dr. Hilborn did) based on the argument that it may be ok
to drive one stock to relatively low levels in order to take advantage of more
opportunities from a co-occurring fish stock. However, managers in certain
regions of the country had a history of selecting quotas higher than what their
scientific advisers recommended. The 1996 revision of the US fisheries law was
designed to stop this abuse. Moreover, the idea of driving some stocks to low
levels presents two practical problems. First, it potentially sets up
incentives to drive these stocks to levels so low that their ecological role is
reduced or eliminated, and could cause a stock collapse. Dr. Hilborn argued
that stocks usually eventually rebound, even after their abundance drops to low
levels. However, he also pointed out that reduced fishing pressure was often
necessary for this rebound to occur, and that certain stocks, for example New
England cod, have not rebounded. Second, the idea that we can reduce certain
species to very low levels in order to exploit others rests on a view that the
ocean is primarily a fish-producing device. There is precedence for such
policies on land, where natural ecosystems are heavily modified in order to
farm it for food production. I personally like the fact that the ocean is still
a wild environment, albeit a stressed one. I’d like to keep it that way and
know I am not alone.

Dr.
Hilborn also brought up concerns that the current law requires overfished stocks
to be rebuilt within 10 years if doing so is biologically feasible. The origin
of this policy is like the one restricting optimum yield: certain fisheries
managers abused rebuilding plans by avoiding current sacrifices and putting off
recovery nearly indefinitely. There is a legitimate problem with current rebuilding
systems, though. They are used for two incompatible purposes: tracking the
overall performance of fish stocks and flagging fisheries that need immediate
attention. Rebuilding plans are required of fisheries that are overfished,
defined as a level that jeopardizes the capacity of the fishery to produce
maximum sustainable yields on a continuing basis. In practice, most stocks use
an overfished threshold equal to about half of the level that would produce
maximum sustainable yields. Conservation groups like having a hard definition
like this as a way of tracking national-level fisheries management performance.
However, for this purpose, multiple categories would be more appropriate, for example
above optimum yield levels, below maximum sustainable yield levels, and in
between these two.

The
second purpose, identifying urgent management needs, is complicated by the
existence of evolving catch limit systems, many of which now automatically
scale back fishing to some degree if there are signs of depletion. Regarding
this purpose, one simple change would be extremely useful: defining overfished
in terms of optimum yield instead of maximum sustainable yield. Doing so would
make it clearer that an overfished designation represents a failure to achieve
the objectives of a fishery. This change in perspective makes a dramatic
operational difference. As long as the catch rules are designed, enacted, and
enforced in a way that is thoughtful about the degree of robustness necessary
to account for environmental fluctuations and produce the preferred mix of
performance, the policy would not be considered a failure just because a stock
happened to drop to low levels. On the other hand, if stocks dropped in ways
that brought the catch rules into question, either because of performance or
new information, a stock would be deemed overfished and its entire management
system would be revisited. This process would be far more comprehensive than a
rebuilding plan but not much extra work.

With
the exception of that one small suggestion for change, the current law is sound.
The real problems are with its implementation. It is true that virtually all
stocks have the same definition for optimum yield. It makes no sense that the
mix of objectives would be the same for industrial-scale offshore fisheries in arctic
waters and small wooden boat nearshore fisheries in the tropics because they are
influenced by such different economic, social, and ecological factors. I made
this argument repeatedly in my work 10-15 years ago, without much success. Hopefully
the time is right to make it again now.

The
challenges we face are not much different from 10-15 years ago. The process of
designing effective catch-limit rules is a long-term planning exercise, which
will not be seen as a priority for managers who are usually focused on crises.
An even greater challenge is the need to educate decision-makers about the
trade-offs they face when designing control rules. To do this right, we have to
have effective communication among experts in biological and social science in
ways that are knowledgeable of and responsive to policy wants and needs. This
is a big part of what we are trying to do at Bridge Environment. We are not
alone this time, though. With broader interest and increased resources to
tackle these issues, we can achieve meaningful improvements in long-term US
fishery management strategies. Let’s hope the interest and resources are there.